Everyone dislikes feeling cheated out of a better deal. More and more employers are offering consumer-driven health care options, but too often they aren’t explaining them to employees. So few employees take advantage of the opportunities presented. This is most common (and perhaps most tragic) when it comes to health reimbursement accounts (HRAs).
With an HRA the company is, in essence, giving out free money. It doesn’t count as taxable income. It doesn’t count against a bonus. It doesn’t count against vacation time. It is just “free” money that is available to use as needed for health-related expenses that qualify, especially preventive and wellness-related expenses. Qualified expenses vary by company, but may include things like an annual check-up, joining a gym, smoking cessation programs and more.
In many cases, the company offers the employee a health debit card in order for the employee to avoid the initial expense and then having to wait for its reimbursement. But the company is not giving this free money out of the goodness of their corporate heart. Instead, employers have discovered that it is less expensive to reimburse employees for wellness care than to pay for them to be sick. Also, they get more productivity this way. And, in most cases, it costs less to pay for actual services received than to pay the overhead of an insurance premium for all employees even if many of them do not use the coverage.
Here is an example of a typical workplace: There are two health plans offered. One plan is a traditional insurance program and the other is a high deductible health plan (HDHP) with an HRA. But the employees who are making this latter choice have very little to go on. Most often, it basically comes down to one piece of educational material with a single paragraph or so that indicates an HRA option is available. But it does not define the HRA, mention the lower premiums attached, or describe any of the benefits.
Unfortunately, this scenario is becoming more and more common, where a better option exists, but the employee and consumer are given very little information about it. And because it is so different from the “traditional” plan, most may not even know how to begin asking the questions.
Stick to the basics:
- How much is the premium?
- How much choice do I get in providers?
- What does the company pay and what do I pay?
- At what point do I get 100% coverage?
- Who decides what is covered?
- What is covered?
- Are there pre-tax ways to cover my expenses or reimbursement opportunities for preventative and wellness care?
Demand a consumer education. The whole nature of the health care system is changing and consumers will be left behind with yesterday’s high prices if they aren’t careful. An employee’s primary responsibility when choosing a health care plan should be to ask the right questions.